Question

Coronado Industries had the following inventory transactions occur during 2018:  Unit Cost/unit 2/1/18Purchase56$503/14/18 Purchase 92$415/1/18Purchase66$50The company sold 150 units at $60 each and has a tax rate of 40%. Assuming that a periodic inventory system is used, what is the company’s gross profit using LIFO?

Answer 1

Answer:

$2,256

Explanation:

Given that,

Number of units sold = 150 units

Selling price = $60

Tax rate = 40%

                            Unit       Cost/unit

2/1/18  Purchase     56          $50

3/14/18  Purchase    92          $41

5/1/18    Purchase    66          $50

Cost of goods sold:

= (66 units × $50) + [(150 units - 66 units) × $41)

= $3,300 + $3,444

= $6,744

Sales:

= Number of units sold × Selling price

= 150 ×  $60

= $9,000

Gross profit:

= Sales - Cost of goods sold

= $9,000 - $6,744

= $2,256